Resolution 115/2003

BOARD RESOLUTION NO. 115/2003
SUBJECT: ECONOMIC POLICY ADVISORY – APPROVES MODIFICATIONS TO THE LEGAL RESERVE REGULATION

HAVING REVIEWED:
Law 1670 of October 31, 1995.
The Consolidated Text of the Legal Reserve Regulation approved by Board Resolution No. 088/2000 of November 28, 2000, and subsequent modifications approved by Board Resolutions 049/2001 of June 5, 2001, 113/2001 of November 13, 2001, 120/2001 of November 29, 2001, 012/2002 of January 22, 2002, 074/2002 of July 2, 2002, 079/2002 of July 23, 2002, 123/2002 of October 22, 2002, and 139/2002 of December 10, 2002. The Report from the Economic Policy Advisory APEC-INEP 054/03 of October 15, 2003. The Internal Communication from the Legal Affairs Management GAL No. 039/2003 of October 15, 2003.

CONSIDERING:
That the Central Bank of Bolivia, in compliance with Law 1670, has established a Legal Reserve regime mandatory for Banks and Financial Intermediation Entities.

That by Board Resolution No. 074/2002, the Legal Reserve Regulation was temporarily modified so that a part of the legal reserve in titles for foreign currency and MVDOL deposits could be invested in a new fund at the BCB, called the Internal RAL-ME Fund, and the remainder, called the External RAL-ME Fund, would remain abroad.

That by Board Resolution No. 139/2002, the validity of the Internal RAL-ME Fund was extended from October 27, 2002, to December 31, 2003, and the Monetary and Exchange Policy Committee was authorized to approve increases in the Internal RAL-ME Fund, transferring resources from the External RAL-ME Fund, up to the limit established by Board Resolution No. 074/2002, and to inform the Board of the decisions adopted.

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That due to the impossibility of convening the Monetary and Exchange Policy Committee, the terms and procedures established in Board Resolution No. 139/2002 cannot be applied.

That the Economic Policy Advisory, through Report APEC-INEP No. 054/03, recommends the temporary transfer of a part of the legal reserve in titles to a fund called Internal RAL-ME.

That the Legal Affairs Management, through Internal Communication GAL No. 039/2003, considers that there is no legal impediment for the Board to approve this determination.

That in virtue of the powers conferred by Articles 1, 7, 14, 37, and 54 subsections a), i), and o) of Law 1670, the Board of the BCB is authorized to modify the Legal Reserve Regulation as well as the BCB Regulations, by two-thirds of the votes of all its members, without the need for any additional administrative act.

THEREFORE,
THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:

Article 1.- Temporarily transfer the sum of $200 million from the legal reserve in foreign currency and MVDOL titles to the Internal RAL-ME Fund, which represents 68% of said legal reserve in foreign currency and MVDOL titles, and administer and invest these resources within the framework of what is provided by Board Resolution No. 074/2002.

Article 2.- The provisions of the Legal Reserve Regulation that are not within the scope of the temporary modifications approved by this Board Resolution remain unchanged.

Article 3.- The Monetary and Exchange Policy Committee will resume the powers indicated in Board Resolution No. 139/2002 of December 10, 2002, starting from the date of approval of this Board Resolution.

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Article 4.- This Resolution shall enter into force from the date of its approval.

Article 5.- The Presidency and General Management are charged with the execution and compliance of this Resolution.

La Paz, October 15, 2003

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Juan Antonio Morales A.

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Enrique Ackermann A. José Luis Evia V.

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Fernando Paz B. Jaime Apt B.